Reducing your overhead expenses
Every small business owner wants to do what he or she can to reduce his or her overhead expenses. The main reason that business owners want to reduce their overhead expenses is that by reducing their expenses they can increase their profits. This is great for small business owners because it means that their business is going to be earning more that year.
Here are the steps that you can take to reduce your overhead costs.
You need to take a close look at your marketing costs because most small businesses are spending more money than they need to on their marketing. If you are spending a lot of money on marketing, you should look into seeing what you can do to cut back the amount that you are spending, especially if you are an established company. If your company is already established you will not need to spend as much money in marketing as you did when you were first starting up your company. Another thing to look for is to see if you can do some of the marketing, yourself now that you have a better understanding as to what is needed. Try sending newsletters to your customers by email rather than by mail. You can also send coupons to your customers through an email rather than in the mail. Both of these will help to lower your bills for paper and ink, as well as postage.
You will also want to look at your businesses skills and identify your strengths and weaknesses that you have as a small business owner. By learning about the different areas of the business, you can actually save money on your overhead costs, even if it is just learning the basics of that department. For example, many people spend hundreds of dollars on getting work done on their computers that with a little time and practice you can learn to do yourself.
You will also need to take a close look at your inventory that you have on hand because it is inventory that a lot of money is lost within a company. If you do not have a good idea of how inventory works you can end up losing a lot of money. Therefore, what you will need to do is to keep track of your inventory that is purchased by using the correct type of inventory method. You can also watch how much inventory you are buying at a time, you do not want to have too much on hand because that will lower your profits, but you also want to have enough on hand to meet your customers demands. If you are unsure of how to lower your inventory costs, you can hire a consultant to offer you advice on how to lower inventory costs.
Now that you have reduced your costs in the main areas of your business, you are going to need to look at other areas of your business to see where you can make some changes to help reduce costs. You are going to need to look at your rent expense, office expenses, and utilities to see what you can do to try to reduce those costs. One way to save money on rent is to split the building with another business, which is called subletting. You can also extend your lease to get a rate reduction.
The last thing that you need to look at to reduce your overhead costs is any hidden costs that your company might have. The most popular hidden cost can for businesses is outsourcing. If you use outsourcing this can be, costing more money than if you were to do the business in house. Take a close look and compare the numbers to see which method would work better to reduce your costs.